Buying And Selling Currency Pairs

Forex trading is the simultaneous buying of one currency and selling another. Currencies are traded through a broker or dealer, and are traded in pairs.

For example the euro and the U.S. dollar (EUR/USD) or the British pound and the Japanese yen (GBP/JPY).

When you trade in the forex market, you buy or sell in currency pairs.

Imagine each currency pair constantly in a “tug of war” with each currency on its own side of the rope. Exchange rates fluctuate based on which currency is stronger at the moment.

Major Currency Pairs

The currency pairs listed below are considered the “majors.”

These pairs all contain the U.S. dollar (USD) on one side and are the most frequently traded.

The majors are the most liquid and widely traded currency pairs in the world.

Currency Pair

Countries

FX Geek Speak

EUR/USD

Eurozone / United States

“euro dollar”

USD/JPY

United States / Japan

“dollar yen”

GBP/USD

United Kingdom / United States

“pound dollar”

USD/CHF

United States/ Switzerland

“dollar swissy”

USD/CAD

United States / Canada

“dollar loonie”

AUD/USD

Australia / United States

“aussie dollar”

NZD/USD

New Zealand / United States

“kiwi dollar”

Major Cross-Currency Pairs or Minor Currency Pairs

Currency pairs that don’t contain the U.S. dollar (USD) are known as cross-currency pairs or simply as the “crosses.”

Major crosses are also known as “minors.”

The most actively traded crosses are derived from the three major non-USD currencies: EUR, JPY, and GBP.

Euro Crosses

Currency Pair

Countries

FX Geek Speak

EUR/CHF

Eurozone / Switzerland

“euro swissy”

EUR/GBP

Eurozone / United Kingdom

“euro pound”

EUR/CAD

Eurozone / Canada

“euro loonie”

EUR/AUD

Eurozone / Australia

“euro aussie”

EUR/NZD

Eurozone / New Zealand

“euro kiwi”

EUR/SEK

Eurozone / Sweden

“euro stockie”

EUR/NOK

Eurozone / Norway

“euro nockie”

Yen Crosses

Currency Pair

Countries

FX Geek Speak

EUR/JPY

Eurozone / Japan

“euro yen” or “yuppy”

GBP/JPY

United Kingdom / Japan

“pound yen” or “guppy”

CHF/JPY

Switzerland / Japan

“swissy yen”

CAD/JPY

Canada / Japan

“loonie yen”

AUD/JPY

Australia / Japan

“aussie yen”

NZD/JPY

New Zealand / Japan

“kiwi yen”

Pound Crosses

Pair

Countries

FX Geek Speak

GBP/CHF

United Kingdom / Switzerland

“pound swissy”

GBP/AUD

United Kingdom / Australia

“pound aussie”

GBP/CAD

United Kingdom / Canada

“pound loonie”

GBP/NZD

United Kingdom / New Zealand

“pound kiwi”

Other Crosses

Pair

Countries

FX Geek Speak

AUD/CHF

Australia / Switzerland

“aussie swissy”

AUD/CAD

Australia / Canada

“aussie loonie”

AUD/NZD

Australia / New Zealand

“aussie kiwi”

CAD/CHF

Canada / Switzerland

“loonie swissy”

NZD/CHF

New Zealand / Switzerland

“kiwi swissy”

NZD/CAD

New Zealand / Canada

“kiwi loonie”

Exotic Currency Pairs

No, exotic pairs are not exotic belly dancers who happen to be twins. Exotic currency pairs are made up of one major currency paired with the currency of an emerging economy, such as Brazil, Mexico or Hungary.

The chart below contains a few examples of exotic currency pairs. Wanna take a shot at guessing what those other currency symbols stand for?

Depending on your forex broker, you may see the following exotic currency pairs so it’s good to know what they are.

Keep in mind that these pairs aren’t as heavily traded as the “majors” or “crosses,” so the transaction costs associated with trading these pairs are usually bigger.

Currency Pair

Countries

FX Geek Speak

USD/BRL

United States / Brazil

“dollar real”

USD/HKD

United States / Hong Kong

USD/SAR

United States / Saudi Arabia

“dollar riyal”

USD/SGD

United States / Singapore

USD/ZAR

United States / South Africa

“dollar rand”

USD/THB

United States / Thailand

“dollar baht”

USD/MXN

United States / Mexico

“dollar mex”

USD/DKK

United States / Denmark

“dollar krone”

USD/SEK

United States / Sweden

“dollar stockie”

USD/NOK

United States / Norway

“dollar nockie”

USD/RUB

United States / Russia

“dollar ruble” or “Barney”

USD/PLN

United States / Poland

“dollar zloty”

It’s not unusual to see spreads that are two or three times bigger than that of EUR/USD or USD/JPY. So if you want to trade exotics currency pairs, remember to factor this in your decision.

G10 Currencies

The G10 currencies are ten of the most heavily traded currencies in the world, which are also ten of the world’s most liquid currencies.

Traders regularly buy and sell them in an open market with minimal impact on their own international exchange rates.

Country

Currency Name

Currency Code

United States

dollar

USD

European Union

euro

EUR

United Kingdom

pound

GBP

Japan

yen

JPY

Australia

dollar

AUD

New Zealand

dollar

NZD

Canada

dollar

CAD

Switzerland

franc

CHF

Norway

krone

NOK

Sweden

krona

SEK

Denmark

krone

DKK

BRIICS

BRIICS is the acronym coined for an association of five major emerging national economies: Brazil, Russia, India, Indonesia, China and South Africa.

Originally the first four were grouped as “BRIC” (or “the BRICs”). BRICs was a term coined by Goldman Sachs to name today’s new high-growth emerging economies.

BRIICS is the term used by the OECD, the rich-country think tank adds Indonesia and South Africa.